March 29, 2024

Higher Education in Florida

UF's online university has become a 'cash cow'

Mike Vogel | 5/28/2014

Virtual courses, real money

Last month, the University of North Florida in Jacksonville began offering a $15,676 online master’s in special ed and a $25,536 online doctorate in nursing and two other programs. To launch them, the public university contracted with Academic Partnerships, a Dallas company that moves traditional courses into online formats. UNF establishes the content, teaches the courses and decides whom to admit. In return for half the student tuition revenue for five years, AP markets the programs across the country, recruits applicants and helps retain students. In the first year, UNF expects to bring in $2.4 million in gross revenue and have an $800,805 profit.

Florida’s public universities in 2011 began offering online programs at market rates, free of state strictures on how high tuition could be. Since then, Florida institutions have dived into online programs — usually in majors with a clear career payoff — for which they can charge whatever the market will bear. It expands access to their colleges while bringing in higher margin students. For the private companies that make it happen, there’s a lucrative payday.

Institutions turn to outside companies for their expertise. They also avoid startup costs — having to hire workers to build online courses and then fire them once the programs need only maintenance work. Private companies and their call center help desks also have the scale to efficiently handle the 24/7 demands of students, right down to the Sunday night crush of students racing to meet weekly classwork deadlines.

The market ranges from companies that offer every service in every education market to niche players focused on a particular segment.

Some players in Florida, a state that’s in the lead pack nationally in online education:

> In Florida, the private market leader is Washington, D.C.-based-Blackboard, which supplies some form of educational service, for online and offline programs, to about 180 higher education institutions here. A star client is Embry-Riddle Aeronautical University in Daytona Beach, with which Blackboard has a long relationship and which gets high marks in independent rankings for its online education.

> Tampa-based Bisk Education contracts with Jacksonville University, the University of Florida, the University of South Florida and the Florida Institute of Technology. (FIT’s business college is named for Bisk founder and FIT donor Nathan Bisk.)

> Pearson, the British multinational, has aggressively built its business helping schools move online. In 2012, for instance, it paid $650 million for online provider EmbanetCompass, the contractor on eight UF online grad programs. Now Pearson also is the contractor on UF Online, the state’s designated online university. UF projects Pearson will see $184 million in cumulative revenue through 2024 from the deal. UF expects 24,100 students by 2024.

UNF’s short-term projections for the Academic Partnerships programs are far more modest. It envisions 20 to 30 students per semester in master’s programs in special ed and nutrition and the nursing doctorate. A new semester begins every eight weeks. UNF expects 40 students per semester for a program that takes registered nurses to a bachelor’s in nursing.

Academic Partnerships has raked in millions in Florida at older programs. FIU has paid AP $16.5 million since first hiring it in 2009 for an MBA program. The University of West Florida from 2011 to March paid AP, which counts former Gov. Jeb Bush as a senior adviser and investor, $1.5 million for its half share of student revenue from a master’s in education, a bachelor’s in registered nursing and a doctorate in curriculum and instruction.

Forbes recently reported AP spends an average of $2 million per school to recruit students and to set up courses and do other work. AP also can educate an undergraduate for $1,500 a year, Forbes said, “making digital degrees a profit machine even after accounting for the significantly higher costs of acquiring virtual students.”

Revenue-sharing arrangements are on the wane, says Katie Blot, Blackboard’s senior vice president for education services. Schools desire long term to capture more revenue as well as establish a base of in-house delivered expertise and services.

Other new trends in online education are student access through mobile devices — class on your phone — and new designs that are more learner-centered rather than institution-centered. In the eyes of users, Blot says, the average institution isn’t doing enough to make interaction easy.

Expect online to grow. Insider Higher Ed’s 2014 survey of chief academic officers found 52% of provosts at public universities, 53% at private and 74% at for-profits anticipate major allocations of funds in the new budget year on online ed.

“It’s certainly on the rise,” Blot says.

Tags: Education, Higher Education

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